* U.S. producer prices fall in July, underlying inflation
* Disney tops Netflix on streaming subscribers, shares jump
* U.S. weekly jobless claims rise for second straight week
NEW YORK, Aug 11 (Reuters) - The Nasdaq retreated to close
lower on Thursday despite fresh evidence of cooling inflation on
the realization the Federal Reserve still needs to aggressively
boost interest rates to fully tame rising consumer prices.
The S&P 500 retreated after earlier hitting fresh
three-month highs after data showed the U.S. producer price
index unexpectedly fell in July.
The drop in PPI raised bets in futures markets that the Fed
would hike rates by 50 basis points in September instead of 75
basis points as was expected earlier in the week.
The S&P 500 and Nasdaq had surged more than 2% on Wednesday
after a softer-than-expected read on consumer inflation. But the
rally came as policymakers left little doubt they will tighten
monetary policy until price pressures fully abate.
With the labor market showing signs of softness as the
number of Americans filing new claims for unemployment benefits
rose for the second straight week, the Nasdaq turned lower as
investors questioned the economy's strength.
"It was a better CPI print yesterday than expected and a
better PPI print this morning than forecasted by analysts. So it
fit that theme, that peak inflation has occurred as energy
continues to decline," said George Catrambone, head of Americas
trading at DWS Group. "But I would be concerned about a head
According to preliminary data, the S&P 500 lost 3.19
points, or 0.08%, to end at 4,207.05 points, while the Nasdaq
Composite lost 74.73 points, or 0.58%, to 12,780.08. The
Dow Jones Industrial Average rose 32.20 points, or 0.10%,
Six of the 11 major S&P 500 sectors advanced, with energy
leading with a 3% gain that helped value stocks
advance as growth shares fell.
Boosting the blue-chip Dow and the S&P 500, banks
extended their rally with Goldman Sachs and
JPMorgan Chase & Co up more than 1% each.
Benchmark U.S. Treasury yields hit more than two-week highs
as bond investors bet the Fed will press on with hiking rates as
inflation is still hot, even though price pressures have eased a
Aggregate demand, as seen by an almost 9% increase in
aggregate spending power, is still too strong and may lead the
Fed to stay aggressive longer than many hope, said Jack
Janasiewicz, lead portfolio strategist at Natixis Investment
"We're becoming a little more worried because the Fed might
have to do a little bit more work to try to cool that excess
demand side of the equation," Janasiewicz said.
High-growth stocks that had rallied on Wednesday, such as
Tesla Inc and Amazon.com Inc, fell.
Despite its recent bounce of mid-June lows, the tech-heavy
Nasdaq is down 17.8% so far this year as fears of an aggressive
monetary policy sapped appetite for equities, particularly
The U.S. central bank has raised its policy rate by 225
basis points since March as it battles to cool demand without
sparking a sharp rise in layoffs.
In earnings-driven news, Walt Disney jumped as the
media giant edged past rival Netflix Inc with 221
million streaming customers and announced it will increase
prices for customers who want to watch Disney+ or Hulu without
Bumble Inc fell on cutting its full-year revenue
forecast, taking a hit from the Ukraine war, while also
grappling with competition from rival Match Group Inc
in the online dating market.
(Reporting by Herbert Lash, additional reporting by Bansari
Mayur Kamdar and Aniruddha Ghosh in Bengaluru; Editing by Arun
Koyyur and Lisa Shumaker)